New India Assurance Company Ltd v. Swaran Singh & Ors.

Present: Mr. R.C.Gupta, Advocate, for the appellant. None for the respondents. K.Kannan, J.(Oral)

1. The Insurance Company is in appeal against the judgment of the MACT against the liability cast on it, inspite of the fact that the driver who drove the vehicle was proved to have had a fake driving license.

2. The liability of the Insurance Company in a case of a fake license or a renewal of a license which was a fake one have been considered by the Hon'ble Supreme Court in several cases and the decisions in National Insurance Company v. Swaran Singh (2004) 3 SCC 297 and United Indian Insurance V. Divinder Singh (2007) 8 SCC 342 are instructive. In the latter judgment, it has been held that a renewal of a fake driving license is no license at all and hence, the insurer shall not be F.A.O No. 1681 of 1999 2 liable.

3. The judgment of the Supreme Court in Swaran Singh (supra) has an immediate relevance for us in this case for the effect of proof of fake license in the context of the need for discharging the burden of proof on the Insurance Company the insured had committed a breach of terms of the policy. The fact that the driver had a fake license will absolve the insurer of the liability of the insurer only, if it is established that the accident was on account of reasons where the possession of valid driving license will have relevance for consideration of the aspect of negligence that has to be proved. If the accident was on account of say, mechanical defect in the vehicle, the issue of the validity of license will have no relevance. The Hon'ble Court had said,

31. The right of the victim of a road accident to claim compensation is a statutory one. He is a victim of an unforeseen situation. He would not ordinarily have a hand in it. The negligence on the part of the victim may, however, be contributory. He has suffered owing to wrongdoing of others. An accident may ruin an entire family. It may take away the only earning member. An accident may result in the loss of her only son to a mother. An accident may take place for a variety of reasons. The driver of a vehicle may not have a hand in it. He may not be found to be negligent in a given case. Other factors such as unforeseen situation, negligence of the victim, bad F.A.O No. 1681 of 1999 3 road or the action or inaction of any other person may lead to an accident.

4. These observations in Swaran Singh's case show that the proof of fake license does not conclude the issue. The conscious act of the insured in the complicity with the driver in securing a fake license may exclude liability. But if the insured had made bona fide enquiries and he was under the belief that the driving license shown by the driver at the time of employment or immediately afterwards but before the accident was genuine one, though it was fake, it could not be said that the insured had committed any breach of the terms of the policy. Swarans Singh's case (supra) states as follows:-

75. As has been held in Sohan Lal Passi the insurance company cannot shake off its liability to pay the compensation only by saying that at the relevant point of time the vehicle was driven by a person having no license.

5. The Tribunal has considered the evidence of the owner in the following words:- “Even if for the sake of arguments, it is assumed that no such license was issued to Manoj Kumar respondent, even then in view of the evidence produced by respondent No. 2, it cannot be held that she violated the terms and conditions of the insurance policy which may absolved the insurance company from its liability. She has produced cogent and convincing evidence to the effect that Manoj Kumar F.A.O No. 1681 of 1999 4 was employed by her for driving the truck after she had seen his driving license and having satisfied herself that he was a qualified driver. She herself stated as R.W.1 that she had employed Manoj Kumar in 1994. She accompanied by her father went to one Gurdeep Singh and told him that they be given a good driver, Gurdeep Singh recommended Manoj Kumar and she employed him. At that time she had seen his driving license and as per that license he was competent to drive the truck. That driving license was issued by U.P. State and was still valid for further period of two years. This statement of the respondent has been fully corroborated by Gurdeep Singh RW-2. He stated that Manoj Kumar was employed by him as driver in 1985. He was competent to drive heavy vehicles, including the truck. Manoj Kumar worked with him for seven years and when Rajni came to him along with her father, he recommended Manoj Kumar and thereafter, he was employed by Rajni respondent. Nothing could be extracted during the cross- examination these of witnesses on the basis of which it may be held that they have not made correct statements in the Court or they had not seen the driving license of Manoj Kumar.”

6. Learned counsel on behalf of the Insurance Company still wants to contend in the cross examination, the owner had F.A.O No. 1681 of 1999 5 admitted that the copy of the license produced did not have a photograph and she had also given statement in her evidence that she did not know whether the driver was being prosecuted for not possessing valid driving license. Learned counsel also points out that she had admitted in cross examination that she did not test the driving skills of the driver at the time she employed. It is also the contention of the learned counsel that when the vehicle was involved in an accident, the car must have been seized by the police and brought before the Magistrate and it would have been released only on furnishing surety bonds. At that time she ought to have known whether the driver had valid driving license or not. The case will have to be tested on the belief that the owner had at the time when she employed the driver and how such a belief persisted till the accident. The other information of his not having an effective license that she could have, had subsequently, is wholly irrelevant. Hypothetically speaking, if the owner had come by information that the particular license which was shown was fake subsequently, it could still not make a difference to the insurer, for the breach of conditions of the policy, must be examined as on the date of the accident.

7. The claim of exclusion of liability by the Insurance Company cannot be accepted. The appeal is consequently dismissed. 1st July, 2010 Shivani Kaushik [K.KANNAN] JUDGE